Premium Bonds: Are they worth it? Discussion Area

ReportInvestor

People who want "a bit of a flutter" would do far better, IMHO, to invest £50 regularly in the stock market for 10 years.

If you don't want the cash for 20 years the risk is greatly reduced, but the potential returns (on average) will probably beat Ernie by a country mile .

Sir_Alan

casca wrote:

Can someone please explain how the calculation of winning the lottery is 1 in 14 million? By my calculation, 49^6 = +- 13.8 billion.

Your error is to assume that each of the six numbers drawn can be any number in the range 1-49; that would indeed produce the result 13841287201. However, that would present the possibility that the winning numbers could be 49 49 49 49 49 49.

The actual calculation is for a full permutation of any six different numbers from 49, as each number drawn is no longer available to be drawn again. This does indeed produce the result 13983816.

The calculation is: (49*48*47*46*45*44)/(1*2*3*4*5*6)=13983816.

A football pools full perm of any 8 from 10 works the same way:
(10*9*8*7*6*5*4*3)/(1*2*3*4*5*6*7*8)=45 lines.

Also, if the odds were 1 in 14 million, all I'd need to do is wait for the prize to go above £14m and I'd be a guaranteed winner.

Sorry, your logic has completely baffled me there!

Gorgeous_George

If the rollover was in excess of £14million and you (or your syndicate) bought 14million tickets covering every possible combination, you might come out in profit but you might not. If you were the only winner, you would win but what if more than one person had 6 correct numbers?

On 14 Jan 1995 the numbers drawn were 7, 17, 23, 32, 42 and 48 earning 133 jackpot winners £122,510

and on 16 Mar 1996 numbers 2, 12, 19, 28, 38 and 48 earned 57 jackpot winners £145,859

Interestingly, neither combination of numbers would have had two numbers on the the same line of a lottery entry ticket and none of the numbers would have been on the edge of the ticket.

It must have been quite disappointing to have 6 numbers on either of these days.




GG

ashm1

Hi,

How do you work out the recurring odds to account for the loss of compound interest and the first month when the bonds aren't entered in a draw?

For instance if I 'invest' £100 and I win nothing for a year what return to do I need to get next year and what are the odds of getting it?

If you make a zero prize return in a year do you need to increase your bond holding each year to increase your odds to compensate for previous losses?


kind regards,

Ashley.

Gorgeous_George

Ashley

With PBs, like all forms of gambling, the more you 'invest. the more you are likely to lose.



GG

Lea37

I'll not even pretend to understand all the statistical stuff on here but I have read through the entire thread and there are a few replies that are a bit cutting against people who invest in PBs so I thought i'd share our story.

My partner won £100,000 in may with just a £6000 investment (incidentally it was his first block of £1000 that won). He had held the bonds for under 2 years and had won 5 prizes of £50 up until that point and was considering cashing them in the month before the win, not because he was unhappy with them just because we were getting short on cash.

I understand that the odds are against you but somebody has to win and we were fortunate enough to win a prize way above our expectations that was probably statistically unlikely. I realise that this was a tremendous bit of luck but it proves that even slim chances can pay off.

Since winning we now have a £30,000 stake each. The fella's luck continues to be greater than mine:

Me:

July (first draw) - 2 x £50
September - £50
Novemer - £50

= £200

Him:

August - 3 x £50
September - £100
£50
November - 3 x £50

= £450

I'm not sure if these are good returns or not but to be honest I don't care as winning the £100,000 has changed our lives and given us a security we never dreamed we'd have and it has shown us that regular Joe's can and do win and we may be lucky enough to win again.

Who knows?

I'm not trying to convince anybody to invest in PBs but thought I would add our story to the debate.

Milarky

Thank you for sharing your (very positive) experiences Lea37. And what you report happening between the two 30K bond holdings you now have very much shows the pattern one would expect - between you there have been 12 prizes over 4 months' draws [nothing in October?] plus one £100 prize. The ratio of £100 to £50 in the draw is about 9 to 1, so this is not surprising. You should average 2.5 prizes per month on average between you - 10 by now - so that's looking about right also. So, repeated over the next 8 months this pattern would give you another £1300 jointly - and £1950 for the year.

I suppose if you say to yourself that has come from an initial stake of £6000 - plus the £46,000 you also now get interest on at 5% in a bank - you aren't going to be fussed about whether it's only '2.75%' or '3.15%' are you?

Milarky

Gorgeous_George wrote:

It must have been quite disappointing to have 6 numbers on either of these days.




GG

You forget, George! that in the Mid 90s you could buy a small castle with £140,000! So that's like '£3million' in today's money :rotfl:

Gorgeous_George

Lea37

Congratulations!

In all forms of gambling there are winners. For every BIG winner, tere needs to be many more losers.

As an investment, PBs remain poor - unless you are lucky. Just the same witht the lottery, horse racing or the roulette wheel etc.



GG

Chongqing_Steve

Whatever the worth of premium bonds, I have spare cash which I want to use to buy premium bonds, but there are problems:
I am British, but I live in China. This is no problem, as when I am in UK and buy premium bonds at a post office, within 10 days my bonds arrive at my address in China.
The company I work for is also British, but I am paid in US dollars into my Bank of China account. Because of financial stupidity by my ex-wife, I cannot get a UK bank account.
The problem occurs when I try to use a credit card to buy online. I had to fight for three years to get a credit card here, and if anybody wants to know how to do it, let me know. The on line application system for premium bonds will not allow my postcode, it seems to want a UK code only. Second, it will not allow my credit card, which can be used in any currency, but demands a debit card.
Short of taking the cash to UK every couple of years, is there a way to purchase premium bonds online with a multicurrency credit card from China?